New figures from the Central Bank show that loans to Irish households declined at a rate of 3.7% on a yearly basis in December.
This compares to a slowdown of 3.8% in the two previous months.
Today's figures show that lending for house purchase, which accounts for 81% of total household loans, declined at an annual rate of 2.7% last month. Lending for consumption and other purposes fell by 7.5% over the same time.
Many Irish consumers and households are still burdened with a huge level of outstanding debt and are in no hurry to add to their debts.
Commenting on today's Central Bank figures, Merrion economist Alan McQuaid said that the credit problem is not just unique to Ireland, with general weakness in lending across the euro zone.
The European Central Bank has tried to address the problem through a number of stimulus measures. "But the fundamental problem remains that the ECB is only one player on the pitch and it requires support from politicians via structural reforms and looser fiscal policy," the economist said.
He said measures that increase the ability of banks to lend are only effective if there is demand for credit that is not being fulfilled, but the problem at the moment appears to be as much about the lack of demand for credit as it is about the supply of credit.
"The new mortgage lending rules from the Central Bank are likely to dampen demand/supply of credit further, suggesting that bank lending will remain subdued in 2015, and still well below what the economy needs in the long-run," Mr McQuaid stated.
